Town Square

California workers, Dems want to give you a 3% pay cut

Original post made
by jimf01, another community,
on Feb 24, 2012

The California Legislature, dominated by Democrats who hold a majority just shy of 2/3, have had difficulty convincing the Republicans to approve tax increases. They have also had difficulty convincing voters to approve tax increases via various ballot propositions in recent years.

They have a new angle. The public has now become sensitized to the fact that unionized state employees have lucrative benefit and pension plans that suck a lot of taxpayer money out of the budget every year, (you do know you, the CA taxpayer, pays about 80% of the money that goes to fund CalPERs, and the state employees pay less than 20%, don't you?) and they need to prop up the funding. The new proposal is supported by "Senate President Pro Tem Darrell Steinberg and other political and labor leaders" who came together to tout its glories. Even Gov. Jerry Brown has indicated he was intrigued by the proposal.

The idea is to require every business with five or more employees to enroll employees in a new "Personal Pension" defined benefit program or to offer an alternative employer-sponsored plan. Not a tax, so they do not have to get approval of the Republicans or the voters, apparently.

The kicker is, the legislation say that CalPERS, the California Public Employees' Retirement System would manage the funds. Yes, the same CalPERS that has lost millions in recent years with real estate investments in places like the Mountain House, CA development will get money funneled directly to them from your paycheck.

Of course, this is a win-win for the Democrats in Sacramento, they have figured out how to make you more dependent on government and backstop the unions faltering public pension system in one easy move.

Posted by Phil
a resident of Another Pleasanton neighborhood
on Feb 24, 2012 at 7:36 pm

I applaud this. It is exactly what I was talking about back when one of our Pleasanton locals was pushing local government workers to pay more toward their pensions and to get less in the way of benefits. People kept saying that in the private sector people had only 401k or IRA plans. Now workers in the private sector will get defined benefit pensions like the public sector. And we can make all the frauds on Wall Street who ripped us off and caused the great recession pay for it.

Posted by Wilson
a resident of Amberwood/Wood Meadows
on Feb 24, 2012 at 7:43 pm

Yeah, but I like the logic. State workers are not taxpayers. Only taxpayers pay into this. And key is that workers could voluntarily opt out if they desired. But hey it sounds alarmist enough for those of us who make over 500 grand a year. They ARE coming after our money, and we must do everything we can to protect what is ours. Let school teachers take a cut -- they deserve it.

Posted by franco
a resident of Vineyard Hills
on Feb 24, 2012 at 8:59 pmfranco is a registered user.

That defined benefit plan called social security requires the worker to contribute roughly 7% of before tax income while the employer contributes an equal amount but its contribution gets deducted as an expense. As of December, 2011 the average annual payout to a retired persons is $13K, hardly an amount to get real excited about. Yet, the Pleasanton employee union boss complained how their members don't get social security and get "only" a $36K average annual benefit!!!

Posted by Phil
a resident of Another Pleasanton neighborhood
on Feb 24, 2012 at 11:18 pm

But Stacey, the point is Social Security has proven inadequate to meet the needs of our private sector workers. We need this program to help close the gap, to help spread some wealth around. It also allows the government to expand its role in providing for retired citizens who have given so much to build this country and have seen their livelihood stolen by Wall Street fat cats. Social Security is not enough. 401k plans are a raw deal. We need this program.

CALPERS results at this link and while real estate investments were recognized as a problem and re-strategized, other areas have done ok and the fund return as good as any other. I currently have, and have had, a 401K program at various employers over the last 20 years. Investment advice is either bad or non-existent, company selected 'investment options' have, without fail, greatly under performed market return and unless you manage the account yourself, an investment advisor will cost you (and they aren't generally interested in those people who have under $110-150K to invest. Additionally, most people have no clue how to invest. I would have thought the opportunity to invest retirement contributions/savings in a fund that has performed as well as any over for an extended period would be a good option and certainly beats the 'dart board' approach so many people appear to take.

Posted by EJ
a resident of another community
on Feb 25, 2012 at 5:24 pm

"(you do know you, the CA taxpayer, pays about 80% of the money that goes to fund CalPERs, and the state employees pay less than 20%, don't you?)"

This statement is not true. Pensions are only about 3.3% of the state budget from the general fund and they have been about that amount since 1980. The employer contributes about 14% of the pension and the employee puts in about 11%. The taxpayers have little, if anything to do with this. And the rest, about 70% is earned by investments made by the fund managers. This type of propaganda is only hurting working people and slowly eliminating the middle class. You should not be asking why do government employees have pensions, but why doesn't everyone have a pension.

Posted by need to clarify
a resident of Bonde Ranch
on Feb 27, 2012 at 6:30 am

(Comment deemed inappropriate by Pleasanton Weekly Online staff) 65 percent of the funding for CalPERS pension obligations comes from investments. The remaining 35 percent is split between employee and state contributions. None of the pension fund goes to balance the General Fund. So, if private citizens would like more retirement security, this is another option.

Posted by jimf01
a resident of another community
on Feb 28, 2012 at 10:28 amjimf01 is a registered user.

To correct my statement that "the CA taxpayer, pays about 80% of the money that goes to fund CalPERs, and the state employees pay less than 20%," I brought up CalPERs own figures from their own website. Web Link

Two people tried to correct me by obfuscating on the numbers. The money that goes into CalPERS investments comes from the employees and the employer. YOU, the CA taxpayer are the employer, so it has everything to do with you.

From 1990-2003, the total contribution between employees and employer is roughly equal. Starting in 2004, that changed dramatically. Employee contributions since then total 1/3 and the CA taxpayer paid 2/3 of the amount.

Posted by jimf01
a resident of another community
on Feb 28, 2012 at 10:40 amjimf01 is a registered user.

An important thing to remember is that the CA legislature is working on this scheme to funnel more money directly from your paycheck in to CalPERs coffers. Who do you think controls CalPERs? The Governor and the Legislature. So they will increase the size and power of the state government at your direct expense.
CalPERs has a history of mismanagement and failure. The City of Bell, huge scandal, which agency had oversight in that case and failed? CalPERs.
The CalPERs system has unfunded future liabilities to the tune of $300-$500 billion. That means with all of the money taken in over the years, added to all the money they have made off investments, they still fall short by hundreds of billions of dollars for what they need to pay all the benefits out in the future.

There are more and more state workers reaching retirement with the baby boomers, so the state has to find a way to get more cash, now. Why not steal a little of everyone's paycheck and promise them CalPERs will have a pension for them when they retire?

Posted by Clarification
a resident of Country Fair
on Feb 28, 2012 at 11:33 am

Clarification please,

What he is saying is that you do not generate tax revenue for the state because you are paid 100% from taxpayers money and only pay a portion of that money back in taxes. Overall a negative impact on the tax revenue.

Posted by Clarification, please?
a resident of Another Pleasanton neighborhood
on Feb 28, 2012 at 12:16 pm

Thank you for the explanation of what Wilson meant by that statement. I suppose that it doesn't matter to "the formula" that, in turn, the job that I perform for the state helps directly to bring in further tax revenue? That if my job was eliminated, some additional tax revenues might also be non-existent?

Posted by Clarification
a resident of Country Fair
on Feb 28, 2012 at 1:05 pm

Clarification Please,

I just know that from an economic model individuals who generate revenue aside from taxpayers money have a positive impact on the economic growth those which are paid from taxpayers money have a negative impact on the economy except in their expenditures. The issue in California is that we are beyond the tipping point. Meaning far to many people live off of taxpayers money and they money they make is to much as compared to their source of revenue or income. Pretty simple I believe.

Posted by Bruce Monahan
a resident of Bridle Creek
on Feb 28, 2012 at 1:18 pm

What kind of return do taxpayers get on their tax-paying investments when the state builds roads or bridges, teaches our children, protects our community from crime, fire, pollution, etc? I'll tell you what kind of return: zilch. On my simple economic model, anything taken out of my paycheck is a drain. How simple is that? Period. The tsunami has spilled over the dike. We'll soon be drowning.

Posted by long time parent
a resident of Birdland
on Feb 28, 2012 at 1:38 pm

This does not surprise me at all. The Ponzi Scheme of the public employee retirement cannot survive unless we get more and more people in it (sound like a Ponzi scheme?). The government cannot add as many employees now because their retirement costs have gone way up. The only way for the Ponzi scheme to continue it to add more people into the pool, hence opening it up to others. Like any Ponzi scheme, it just makes the fall all that much harder when it finally collapses; and it will.

It is also amazing that they were allowed to RETROACTIVELY increase the benefits without requiring anybody to ante up to pay for retroactive benefit. Many of those people who benefited from this retroactive increase got it approved and are now retired, telling us "you can't touch us.ha ha."

I don't understand why government employees cannot just use 401(k) plans like the rest of us. From what I keep hearing from the government, we pay the government workers more money because we want the best people working (that is how they justify raises and high benefits). If we have the best people working, they should be smart enough to manage a 401(k) account. Right? If not, then we do not have the best people working for us and we should get rid of them, or pay them less.

Posted by Clarification, please?
a resident of Another Pleasanton neighborhood
on Feb 28, 2012 at 1:41 pm

@Bruce Monahan: so if you're actually serious about what you say, then you will, of course, stop paying taxes, and then stop driving on roads and bridges that are built or maintained with the rest of our tax contributions, stop sending your children (or grandchildren) to public schools, stop utilizing the protection of police services, refuse any help from the fire department in the sad and dire case that your house or vehicle ever catches on fire, never place any object in a public trash or recycling receptacle nor use the city waste facility... etc.

Right? Because none of these have anything to do with you or your life, nope. Zilch.

Posted by Bruce Monahan
a resident of Bridle Creek
on Feb 28, 2012 at 2:00 pm

Clarification, please?

You should listen to "long term parent" from Birdland. It's like a Ponzi scheme. We keep hiring state workers who then demand to be paid with my tax money. What does public trash pickup or putting out a house fire have to do with me? I don't go to school, I put my trash in the dumpsters outside of Safeway, and my house has never caught on fire. It's just unfair that I have to pay for these things. Let someone else pay for them. Or let the state workers pay for them themselves. I don't think it's fair that they only have to pay taxes. They should pay much more because they're doing the work that doesn't contribute to the revenue base. It's simple economics. Like a Ponzi scheme.

There's a study that shows that rich people are more likely to steal candy from a baby. The Philadelphia Inquirer reports that "Other lab-based experiments done by the [snobby liberal] researchers found that study participants who considered themselves wealthy were more likely than those less wealthy to have unethical decision-making tendencies, be dishonest in a negotiation, or skirt the rules to boost their chances of winning a prize, among other traits, the study authors claimed." And why shouldn't we be? How else does one get ahead? Instead of raising my taxes ---- which really IS the unTHINKABLE, don't you think? ---- we need to make state workers pay more for the wages and salaries they earn. It's simple economics really.

Posted by Lewis
a resident of another community
on Mar 2, 2012 at 10:34 pm

long term parent and Bruce Monahan,

The reason why government employees don't have 401(k) plans is because they are smarter than you and the others that do. They have certain qualifications, experience + education that allows them to be employed by government agencies that regulate people like you. Only a sore looser or a person without drive/ambition would want someone with a pension to join them with a 401(k)...why don't you reach up instead of trying to pull down? And for Bruce, i think everyone can tell you don't/didn't go to school...your argument is based on ancient, uncivil times. In addition, instead of making state workers pay more for wages and salaries, why don't we do what the conservatives want,make you pay more and the rich pay less? Your fact/thought pattern is too similar to those that create your problem. And if the tsunami has spilled over the dike, I'm glad I pay taxes for those people legally obligated to help me and my family...too bad you're forced to pay your taxes, or you would be drowning.

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